Doing your taxes good practice for reforming the IRS
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September 26, 1997
Web posted at: 10:08 a.m. EDT (1408 GMT)
An essay by CNN Interactive writer Emily Looney
(CNN) -- Hearing allegations of IRS mistreatment of taxpayers
aired on Capitol Hill this week no doubt was gratifying to untold numbers of citizens who, justified or not, feel wronged by the income-tax system.
But expecting fast and fair reform of the Internal Revenue
Service may be as unreasonable as expecting to finish the
1040 tax form, correctly, in an hour.
The holdup on fast reform is the word "fair." We expect our
tax collectors to do more than just collect taxes.
Our tax system is rightfully entangled with social agendas of
distributing wealth more evenly. It is wrongfully burdened
with tax-code complexity and mismanagement. The trick of
reform will be preserving fairness amid the frustration.
The IRS, like the Mir space station, is struggling to hang on
with outdated equipment. Before the tax system really runs
amok, we need to overcome our hostile inertia toward it to
fix it on two fronts.
The first front is our own vested interest in the current
The second area to address is found inside the IRS, whose
complex management creates frustration for all involved
and, by default, contributes to the uneven treatment of
Forget reform: 'I've got mine'
For an example of vested interests, one needs to look no
further than last summer's tax cuts.
Per-child tax credits, education tax credits and lower
capital gains and estate taxes sailed through Congress and
the White House. Muttered doubts about the wisdom of these
perks were drowned out by strong bipartisan support and a
Whatever the merits of the new cuts, they come at the price
of new doubts -- found house by house -- about whether we
know about all the deductions we qualify for, or can even
expect our accountants to keep up.
The tax changes added 820 pages to the 9,451-page Internal
Revenue Code. That is what Sen. Patrick Moynihan told the
Senate Finance Committee at hearings examining the
findings of the bipartisan National Commission on
Restructuring the IRS.
"I mean you could hurt yourself with that," the New York
Democrat said, thumping a giant pile of papers onto a table.
The whole code is now as bulky as two toe-stubbing boxes of
Meanwhile, while more than four in five Americans voluntarily
pay Uncle Sam what they owe, nearly one in five doesn't.
Among individuals, this so-called "gross income tax gap"
added up to an estimated $95.3 billion in 1992.
Then there's the specter of the rich, who can afford better
advice about using legal deductions to pare their share. In
1993, nearly 2,400 Americans earning at least $200,000 used
the system so well that they owed no income tax at all,
according to IRS figures.
Under such conditions, the self-preserving goal of grabbing
every perk possible appears reasonable. But it's ugly to see
ourselves and our leaders act this way, and it undermines the
objective of fairness.
If it doesn't work, give it a kick
As to the second front of reform, the IRS is accountable to
the Treasury Department and six different House and Senate
committees -- leaving the agency and taxpayers coping with
mixed signals about its mandate.
There's talk of fixing this. A Senate bill would create an
oversight board of presidential appointees, confirmed by the
Senate. The panel would work with Treasury and coordinate
with Congress on IRS issues. In June, President Clinton
created an advisory board to address IRS management.
But however much oversight is added to prevent the kind of
wrongdoing reported to the Senate by the commission,
including collection quotas and illegal assessments, the
system is also subject to the whims of politics and personal
A surprisingly successful experiment begun in fiscal 1995 to
increase IRS authority to collect unpaid taxes was promptly
killed as part of the Congressional changing of the guard
from Democrats to Republicans.
And despite calls for greater efficiency, a lot of people
still like to shuffle paper. While taxpayer filings by
computer and telephone are rising, they still account for
only a fraction of the total. Direct deposit of refunds -- a
promising money-saver -- has yet to become standard practice.
For fiscal 1996, the IRS collected nearly 209 million tax
returns worth $1.49 trillion. It did so despite budget cuts
and shrinking staff, outmoded computers and, says Treasury
Secretary Robert Rubin, reported threats and assaults on its
A CNN/Time poll in March found that most people surveyed
opposed abolishing the IRS and actually thought it did a good
job. But 93 percent wanted changes, from completely replacing
the system to more minor adjustments.
Changing the tax system fairly will be a lot like doing
your taxes. At some point, you have to stop procrastinating,
sit down and patiently work through the details. You can't
fudge the figures forever, and you may have to file for an
extension to get them all in order.
But as the IRS itself could tell you, paying attention to
taxes now will be better than paying the penalties later.
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